1. Staple Food Price Dynamics and
The Covid-19 Crisis in Southern
Africa: Malawi
Presented at the Malawi Policy Event Learning Event by
Greenwell Matchaya*, PhD
g.matchaya@cgiar.org
Co-contributors: Sibusiso Nhlengethwa*, Bhekiwe Fakudze*; Ikhothetsang
Greffiths* *,ReSAKSS/IWMI
2. PRESENTATION STRUCTURE
• Introduction
• Key messages
• COVID-19-related market disruptions and maize price behavior in
selected countries
• COVID-19-related market disruptions and maize price behavior-
Malawi
• Conclusions and recommendations
3. INTRODUCTION
• After February 2020: COVID 19 introduction in Southern Africa
• Control measures to curb the spread of the pandemic : restrictions
of the movement of people, Market bans, border crossing
restrictions, curfews, etc.
• Market disruptions
• A focus on maize markets in Malawi, and the SADC
4. Introduction: Major Maize Production and Consumption Areas
• In Mozambique, Zambia and Malawi, most of maize supply is locally
produced. In Lesotho, imports from RSA -huge
• But there is also a significant cross-border trade among these
countries
• Major production regions in Mozambique include Zambezia,
Nampula, Manica, and Tete provinces,
• While Inhambane, Gaza and Maputo are generally deficit areas
5. Introduction: Major Maize Production and Consumption Areas (cont’d)
• In Zambia, the Eastern, and Central provinces may be considered
surplus,
• While the more urban Lusaka and Copperbelt are generally deficit
areas
• The Southern Region in Malawi is generally a food deficit area,
• whereas the Northern and Central regions may be considered food
surplus, although there are internal spatial variations.
6. Key Messages
• We focus on local staples and community-level markets which
are often overlooked in international data collection efforts.
• In most of the countries examined, price effects of the Covid
crisis propagated very quickly across space.
• The magnitude of price deviations also increased very quickly.
• In some countries, the shock caused prices to rise in deficit
areas and decline in surplus areas as transport restrictions
took hold.
• But in countries that export staples regionally eg. Malawi,
Zambia, Mozambique, trade restrictions overrode those effects
and prices fell both in surplus and deficit areas.
6
7. Key Messages (continued)
• In responses to future shocks, care should be taken to
minimize disruptions in local market operations.
• Effects of local market disruptions on incomes, access to food,
etc. can be devastating.
• Measures should be coordinated across countries to respond
to crises while minimizing interference in cross-border trade.
7
8. Methodology
• Our focus is to test whether the disruptions due to Covid-19 have
affected prices of agricultural commodities.
• We use time series price data, to analyse and predict trends
• For the predictions of prices, we utilize the Seasonal Auto
Retrogressive Integrated Moving Average models (SARIMA)
• We also cross-check the robustness of the results with the
Difference- in-Difference methodologies where appropriate
9. MAIZE GRAIN PRICES CONSISTENTLY HIGHER IN DEFICIT AREAS IN MALAWI
COVID-19-related market disruptions and maize price behavior-
Southern Africa
0
50
100
150
200
250
300
350
Malawi
Kwacha/kg
Maize prices
South Centre North
0
50
100
150
200
250
300
350
400
Malawi
Kwacha/kg
Maize prices
Blantyre Lilongwe Mzimba
10. MAIZE GRAIN PRICES CONSISTENTLY HIGHER IN DEFICIT AREAS IN MALAWI AND
ZAMBIA
COVID-19-related market disruptions and maize price behavior-
Southern Africa
0,00
20,00
40,00
60,00
80,00
100,00
120,00
ZMW/Kg
Maize Grain Prices in Zambia
Average Prices in Surplus Provinces Average Prices in Deficit Provinces
0
50
100
150
200
250
300
350
400
1st
Week
Jan
4th
Week
Jan
2nd
Week
Feb
1s
Week
March
1st
week
April
4th
Week
April
3rd
Week
May
2nd
Wk
Jun19
1st
Wk
Jul19
4th
Wk
Jul19
2nd
Wk
Aug19
1st
Week
Sep
4th
Week
Sep
3rd
Week
Oct
2nd
Week
Nov
1st
Week
Dec
4th
Week
Dec
3rd
Week
Jan
1st
Week
Feb
4th
Week
Feb
new_maize
3rd
Week
April
2nd
Week
May
2019 2020
Malawian
Kwacha
(MK/kg)
Price (MK/kg)
Blantyre Nsanje
11. Maize grain prices increased in Lesotho- a deficit country, but decreased in
Mozambique
COVID-19-related market disruptions and maize price behavior
Southern Africa
0
1
2
3
4
5
6
7
8
9
LSL/KG
Urban price dynamics in Lesotho
Observed Price Maseru Predicted Price Maseru
Observed price Berea predicted price Berea
12. • Many markets experienced a rapid deviation in prices from predicted prices
COVID-19-related market disruptions and staple food price
behavior outside Southern Africa
13. RAPID INCREASE IN THE SHARE OF MARKETS WITH LOWER-THAN-PREDICTED PRICES FOR
MALAWI
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan Feb Mar Apr May
Rural primary markets
Rising prices Declining prices
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan Feb Mar Apr May
Urban markets
Rising prices Declining prices
COVID-19-related market disruptions and maize price behavior-Malawi
14. • Prices declined in both urban and rural areas in Malawi, relative to model predictions
• Maize prices declined significantly in March, April and May but started to stabilize in June
with the easing of confinement measures. More reduction in surplus markets
0
50
100
150
200
250
300
350
PRICE
PER
KG(MK)
Urban Maize prices
Actual Price Predicted Price
0
50
100
150
200
250
300
350
PRICE
PER
KG(MK)
Rural primary maize markets
Actual Price Predicted Price
COVID-19-related market disruptions and maize price
behavior-Malawi
15. SUMMARY AND RECOMMENDATIONS
COVID-19 pandemic has led to some governments measures to control
the spread of the COVID-19 pandemic
Government pronouncements relating to the need to observe social
distancing to limit the spread, have impeded arbitrage between markets
and further led to rising supplies relative to demand,
The reduced demand, together with an increase in supplies from the
harvest season have led to rapidly falling prices in local markets
16. SUMMARY AND RECOMMENDATIONS (CONT’D)
Other direct confinement and containment measures too have led to a
general downward trend in prices.
Affecting the movement of goods and impacting on the cost of food
consumed in the population.
This happened in each of the focus markets Malawi
• The confinements may have created difficulties in cross-border trade and
may have played a greater role in determining price behavior across the
board in each country, not just in border areas.
17. SUMMARY AND RECOMMENDATIONS (CONT’D)
The potential negative impact from the observed decline in prices shows
the critical importance of trans-border trade for smallholder farmers and
small businesses.
For instance, while the downward prices many have been good for
consumers, they likely hurt the ability of producers and aggregators to
produce in future.
• To avoid enormous negative effects on demand, future restrictions and
interventions should be sequenced such that the impact on domestic
markets and cross-border operations are minimized
18. SUMMARY AND RECOMMENDATIONS (CONT’D)
Government support to small food supply businesses would be a good
initiative to minimize the impact on producer and aggregator households.